OFFER FOR INVESTMENT DEVELOPMENT PROJECT OF PA “BELAZ” for the period of 2011-2015

OFFER FOR INVESTMENT DEVELOPMENT OFFER FOR INVESTMENT DEVELOPMENT PROJECT OFPROJECT OF PA “BELAZ” PA “BELAZ” for the period offor the period of 2011-2015 2011-2015

((presentationpresentation, , September,September, 2011) 2011)

1. Development of production capacities for mining dump trucks, road construction and underground equipment, loading railway trains and other specialized equipment in volumes planned for manufacturing in 2015.

2. Creation of production capacities for new products (dump trucks with p/c of 90t, 170t, 320t; 3-axle dump trucks with p/c of 27, 36, and 50 t; underground dump trucks with p/c of 40 t, hopper cars for transportation of cement, cereals, etc.) and long-range units to fit up new products as well as those been manufactured (hydromechanical transmissions and rear axles for dump truck with p/c of 90t and more; multi-disks oil-cooled brakes; unified cab, etc.) by means of modifications of existing capacities and purchasing of new equipment.

3. Development of production capacities for quality steel casting to use in-house and to supply the off-site Consumers.

4. Implementation of new technologies, equipment and tools to secure the settlement of the “bottle neck” problems in production concerning productivity as well as products quality, working conditions, safety and environmental requirements.

5. Development of research and design and laboratory facilities; adjustment of toolroom, maintenance and other auxiliary services and workshops in accordance with production demands.

6. Development of our own manufacturing of quality tools and other technological equipment to manufacture main products.

7. Mechanization and automatization of production processes in the plant workshops in order to increase the work efficiency, to reduce the quantity of employees producing manual labour and to increase production efficiency by means of implementation of flexible reset technologies on basis of modern machines with NPC and machining center module.

8. Introduction of modern informational technologies (CALS-technologies) in all stages of product life-cycle. 9. Increase in quality and technical level of manufactured products; improvement of metrological control

system; implementation of control and control and measuring instruments, devices for initial check of materials and spare parts and testing of technological equipment state in the plant workshops.

10. Shortening of period to adopt new products with organization of production of quality and dynamically updated products.

11. Shortening of orders execution periods by shortening the time of execution of engineering, manufacturing and management processes.

1. MAIN PURPOSES OF THE PROJECT

Production association “Belarusian Autoworks” was created in 1995.PA “BELAZ” comprises:- OJSC “Belarusian Autoworks”;- CJSC “Mogilev Railway Car Building Plant”.OJSC “Belarusian Autoworks” comprises:1. The main enterprise OJSC “Belarusian Autoworks”, located in Zhodino, Minsk region. It was founded in

1958. The enterprise is a legal entity and has its independent balance. The enterprise is under the economic jurisdiction of Ministry of Industry of Republic of Belarus.

2. “S.M. Kirov Mogilev Autoworks” is a Mogilev branch of OJSC “Belarusian Autoworks”. As of 01.12.2010 is a separate structural production subunit of OJSC “BELAZ”, and it is not a legal entity, has its own fixed and working assets, separated by territory, has its independent balance which is included in OJSC “BELAZ” balance.

The structure of OJSC “Belarusian Autoworks” comprises the complex of main and auxiliary workshops necessary for production process of manufacturing the mining equipment, consumer goods and other products and services as well as the divisions and departments providing designing and development of new equipment, technical and economic planning, accounting, material support, marketing researches and sales of products.

OJSC “BELAZ” is the only plant in the CIS territory which produces mining equipment with payload capacity of 25-360 MT.

OJSC “BELAZ” performs designing, production and sales of mining dump trucks of high and extremely high payload capacity in the Republic of Belarus, CIS and overseas countries. BELAZ dump trucks are intended to transport rocks, bulk goods in open-pit mines and construction of large industrial water control facilities.

CJSC “Mogilev Railway Car Building Plant” is located in Mogilev. The enterprise is a legal entity and has its independent balance..

CJSC “MRCBP” object of activity is manufacturing of railway cars.

2. CHARACTERISTICS OF PA “BELAZ” AND THE EMBODIED ENTERPRISES

3. MAIN PRODUCTION OBJECTS DESCRIPTION

OJSC “Belarusian Autoworks” performs designing, manufacturing of pilot samples and production of mining dump trucks of high and extremely high payload capacity of 30-360MT. By manufacturing specialized technological vehicles, aircraft tags, loaders, bulldozers and special vehicles based on them, underground and road construction equipment, vehicles for metallurgical enterprises, the plant extents the products range as well as market outlet.

“Mogilev Railway Car Building Plant” (CJSC “MRCBP”), which is embodied in PA “BELAZ”, performs manufacturing of loading railway rolling stock, namely universal gondola cars and hopper cars for transportation of mineral fertilizers, cement and cereals.

“Belarusian Autoworks” is one of the seven largest world concerns which produce mining equipment as Komatsu-Haulpac, Uclid-Hitachi, Caterpillar, Liebherr, Terex, Cress.

BELAZ mining equipment works in more than 50 countries of the world. OJSC “BELAZ” secures the constant connection with our consumers through 75 companies embodied in

our distribution network. BELAZ dump trucks are developed for different climatic and road conditions. BELAZ mining equipment is adapted for installation of engines of all the leading motor companies of the

world. The consumer is free to choose the manufacturing company and the engine power. The electric transmission also has many options.

“BELAZ” dump truck are notable among the competitors for high specific power, high smoothness of movement rates, good maneuverability, ease of steering, reliability. They prove themselves in difficult operating conditions of deep mines in Extreme North and hot tropical areas.

OJSC “Belarusian Autoworks” manufactures and delivers equipment for mine services: loaders, wheel bulldozers, water sprinkling machines, towing-recovery tractors, as well as produces dump trucks for underground mining operations considering heavy operating conditions.

OJSC “BELAZ” manufactures heavy-duty carriers and slug carriers for metallurgical enterprises and aircraft tags to tow the planes in the airports.

The main types of the products manufactured by OJSC “BELAZ” are shown in the following slides.

BELAZ-75440

Mining dump truck with hydraulic and mechanical transmission.Payload capacity - 32 MT.

Engine power, kW 298-325

Laden weight, kg 23500

Tires 18.00-25, 18.00R25

Body capacity, m3

struck./ «heaped» 2:114,5 / 19,2

BELAZ - 75450

Mining dump truck with hydraulic and mechanical transmission.Payload capacity - 45 MT.

Engine power, kW 448

Laden weight, kg 35000

Tires 21-35;21.00R35

Body capacity, m3

struck./ «heaped» 2:1 21,5/27,7

BELAZ-7555H

Mining dump truck with hydraulic and mechanical transmission.Payload capacity - 55-60 MT.

Engine Cummins

Engine power, kW (h.p.) 559(750)

Tires 24.00R35

Dump truck weight, kg 65000

BELAZ-75570/75580

Mining dump truck with hydraulic and mechanical transmission (75570), electrical mechanical transmission (75580)Payload capacity – 90 MT.

Engine Cummins

Engine power, kW (h.p.) 783(1065)

Tires 31/90-49; 27.00R49

Dump truck weight, kg 74000-75000

BELAZ-7513

Mining dump truck with electrical mechanical transmission.Payload capacity - 130-136 MT.

Engine Cummins

Engine power, kW (h.p.) 1193(1600)

Tires 33.00-51, 33.00R51

Dump truck weight, kg 108600

BELAZ-7517/7518

Mining dump truck with electrical mechanical transmission.Payload capacity - 154-180 MT.

Engine Cummins/MTU

Engine power, kW (h.p.) 1491(2000)/1492(2000)

Tires 36.00R51/37.00R57; 42/90R57

Dump truck weight, kg 134000/140000

BELAZ-75306

Mining dump truck with electrical mechanical transmission.Payload capacity - 220 MT.

Engine Cummins

Engine power, kW (h.p.) 1715(2300)

Tires 40.00R57; 46/90-57

Dump truck weight, kg 156100

BELAZ-75310

Mining dump truck with electrical mechanical transmission.Payload capacity - 240 MT.

Engine Cummins

Engine power, kW (h.p.) 1864(2500)

Tires 40.00R57, 46/90R57

Dump truck weight, kg 161500

BELAZ-75600/601

Mining dump truck with electrical mechanical transmission.Payload capacity - 320-360 MT.

Engine Cummins MTU

Engine power, kW (h.p.)2610(3500)2800(3750)

Tires 59/80R63

Dump truck weight, kg 240000-260000

BELAZ-78250

AC-AC electrical mechanical transmission

Engine power, kW (h.p.) 783

Tires 45/65R45

Digging force, kN 670

Maximum traction force, kN 750

Operating weight, ton 100

BELAZ aircraft carrier

Hydraulic mechanical transmission for aircraft towing with takeoff weight up to 600 ton.

Engine power, kW (h.p.) 330

Operating weight, ton 40-70

Tires 16.00R25; 18.00R25

Maximum traction force, kN 750

MOAZ-75840

Dump truck for underground works with articulated frame. Payload capacity - 40 MT.

Engine power, kW (h.p.)

391(532)

Tires 29,5R25

Operating weight , kg 35450

MOAZ-4055

Load-haul-dump unit for underground works.Payload capacity - 9 MT.

Engine power, kW (h.p.) 190(260)-207(280)

Operating weight, ton 24

Tires 18,00-25

Bucket capacity, m3

struck/ nominal 2,7/3,2

MOAZ-75054

Dump truck with off-road capability equipped with hydraulic mechanical transmission.Payload capacity - 25 MT.

Engine power, kW (h.p.) 264(360)

Tires 26,5-25

Operating weight, ton 20000

MOAZ-75294

Dump trucks for underground works. Payload capacity - 25 ton.

EngineDEUTZ

Engine power, kW (h.p.) 207(280)

Tires 24

Operating weight, ton 18,00-25

MOAZ-7504

Dump truck with off-road capability equipped with hydraulic mechanical transmission.Payload capacity - 27 ton.

Engine power, kW (h.p.) 261(350)

Tires23,5-25

Operating weight, ton 31180

MOAZ-7506

Dump truck with off-road capability equipped with hydraulic mechanical transmission.Payload capacity - 36 MT.

Engine Cummins

Engine power, kW (h.p.) 336(450)

Operating weight, ton 32

Tires 29,5-R25

MOAZ-75034

Dump truck with off-road capability equipped with hydraulic mechanical transmission.Payload capacity - 48 MT.

Engine Cummins

Engine power, kW (h.p.) 447(600)

Operating weight, ton 39,8

Tires 29,5-R29

Hopper-car 19-9774

For transportation of mineral fertilizers

Payload capacity, kg70,500

Tare weight, kg 23000

Body volume, m3 82

Coupler pulling face car length, mm. 13720

Nominal wheel base, mm. 9500

Hopper-car 19-9862/19-9863

For transportation of concrete /for transportation of cereals and other bulky cargoes

Payload capacity, kg72,500/70000

Tare weight, kg 21000/23500

Body volume, m3 63/94

Coupler pulling face car length, mm. 12020/14720

Nominal wheel base, mm. 7800/10500

Open-top wagon 12-9763 Hatch-type, multipurpose

Payload capacity, kg70000

Tare weight, kg 23,6

Body volume, m3 76

Coupler pulling face car length, mm. 13920

Nominal wheel base, mm. 8650

Flat car 19-9832 For carriage of timber and universal large-tonnage containers

Payload capacity, kg67,500

Tare weight, kg 26500

Body volume, m3 112

Coupler pulling face car length, mm. 14620

Nominal wheel base, mm. 9720

4. FORECASTof manufacturing and sales of OJSC “BELAZ” products for 2011-2015

(the parent enterprise is situated in Zhodino)

Description of the products2010 2011 2012 2013 2014 2015

Units $, ths. Units $, ths. Units $, ths. Units $, ths. Units $, ths. Units $, ths.

30 tons 194 23494 300 36330 334 40448 366 44323 398 48198 430 52074

45 tons 195 32897 293 49429 350 59045 377 63600 404 68155 418 70517

55 tons 266 75730 320 91104 334 95090 360 102492 380 108186 410 116727

90 tons 4 2590 18 11653 20 12948 25 16185 28 18127 29 18775

110-130 tons 191 161395 235 198575 297 250965 354 299130 365 308425 383 323635

150-170 tons 1 1082 17 18394 18 19476 20 21640 21 22722 22 23804

180-240 tons 125 152250 152 185136 160 194880 170 207060 180 219240 183 222894

320-400 tons 3 9676 8 25803 10 32254 12 38705 13 41930 14 45156

Loader/bulldozer 43 15205 30 10608 30 10608 30 10608 30 10608 30 10608

Other specialized equipment

12 4826 14 5631 22 8848 28 11262 34 13675 36 14479

Other products (spare parts)

75928 100000 110000 122000 129000 135000

Total: BELAZ 1034 555072 1387 732664 1575 834562 1742 937004 1853 988266 1955103366

8

% to the previous year 139,9% 132,0% 113,9% 112,3% 105,5% 104,6%

% to 2010 132,0% 150,4% 168,8% 178,0% 186,2%

5. FORECASTof manufacturing and sales of S.M. Kirov Mogilev Autoworks –

branch of OJSC “BELAZ” – for 2011-2015 2010 2011 2012 2013 2014 2015

Units Total, $, ths.

Units Total, $, ths.

Units Total, $, ths.

Units Total, $, ths.

Units Total, $, ths.

Units Total, $, ths.

Dump truck MOAZ – 75054 20 2077 25 2613 30 3135 28 2926 26 2717 26 2717

Dump truck - hauler MOAZ-75034, p/c - 50T

0 2 509 2 509 3 763 5 1272 6 1526

Dump truck MOAZ – 7506, p/c - 36T 0 1 310 1 310 1 310 3 931 5 1551

Mining dump truck MOAZ -75291 28 4421 25 3218 30 3861 27 3475 29 3732 28 3604

Mining dump truck MOAZ -75810, p/c -50T.

0 2 883 2 883 2 883 2 883 3 1324

Mining dump truck MOAZ -75840, p/c - 40T

0 3 1193 3 1193 2 795 3 1193 4 1591

Underground autotrain MOAZ 7405-9586 17 704 12 1015 9 761 9 761 8 677 7 592

Underground autotrain MOAZ 74052-9586 2 249 12 1919 15 2399 20 3198 17 2718 19 3038

Loader MOAZ-40484 1 5 0 0 0 0 0

Loader MOAZ-40483-30 0 4 593 10 1481 10 1481 10 1481 10 1481

Load-haul-dump unit MOAZ-4055 5 1034 7 1301 7 1301 9 1673 9 1673 10 1859

Bulldozer MOAZ-40489-33 9 1525 2 386 3 580 4 773 5 966 5 966

Scraper MOAZ -6014, 60148 20 1465 13 952 10 732 10 732 9 659 8 586

Recovery tractor MOAZ-75291, 64428 1 52 0

Roller MOAZ-64428-9890 2 143 0

Chassis MOAZ-9893, 75295 0 0

Truck mixer СМБ-372/472/572 11 799 12 904 12 904 14 1055 15 1130 15 1130

Truck mixer СМБ-349/449/549 2 101 2 101 3 152 3 152 4 202 5 253

Truck mixer СМБ-060 7 185 4 106 4 106 4 106 5 132 5 132

Underground truck mixer MOAZ-75296, 75294

10 1380 8 1031 12 1547 14 1805 15 1934 15 1934

Truck mixer MOAZ-69000, 69010 2 155 5 386 8 617 10 772 12 926 10 772

6. Forecast of production volume for CJSC “MVZ” for 2011-2015

RatesUnits of measure

2010 2011 2012 2013 2014 2015

Production volume in comparable prices, 2010 USD, ths 68 889 97 134 112 773 128 786 146 172 159 474

% to the previous year % 209,7% 141,0% 116,1% 114,2% 113,5% 109,1%

% to 2010 % 141,0% 163,7% 186,9% 212,2% 231,5%

Production volume pcs 1 042 1 500 1 750 2 000 2 270 2 470

7. Main directions of development of PA “BELAZ” enterprises and works and the planned volume of investments

7.1. Central enterprise in Zhodino(without foundry production)

Pos. №

Direction of perspective development

Volume of investments (USD, ths.)

I stage, 2011-2015

1Creation of additional production capacities for dump trucks of high and extremely high payload capacity, road construction and underground equipment (mechanical treatment)

115284

2Creation of production capacities for hydromechanical transmissions of planetary type

--

3 Creation of production capacities for oil-cooled brakes 1400

4Development and modernization of capacities for welding-and-blank processing

18271

5 Development of thermogalvanic production 8280

6Development of paint spray processing for main products by means of modernization of existing paint spray complexes and construction of the new ones

1183,2*

7Modernization of assembly processing (transfer of assembly process of 90T dump trucks to the main assembly line workshop, organization of assembly of 240T dump trucks in assembly and test workshop)

Included in Cl. 16

8 Development of consumer goods production 1040

9Development of designing and research and experimental base of Scientific and Technical Centre and Laboratory base of Chief Technologist Division

24501,4

10 Development of tool production and non-standardized equipment 12943,7

11 Development of service and repair base for technological equipment 6050

12Development of Central Industrial Laboratory, metrological and maintenance services

2131,5

13 Development of IT technologies 6000

14 Development and modernization of energy department 7194,5

15 Development of motor transport department 3324,7

16

Construction of additional production areas for development of production capacities for dump truck with p/c of 220-360 tones (development of Production Workshops Unit-3 (≈ 15 ths. m2); construction of facilities of light-weight design with transfer of the occupied areas for production purposes; use of areas inside the testing ground for finishing of dump trucks with p/c of 220-360 tones)

23000

TOTAL: 230604

7.2. Mogilev branch of OJSC “BELAZ” (“MOAZ”)

Pos. № Direction of perspective development

Volume of investments (USD, ths.)

Notes

I stage, 2011-2015

1Creation of additional production capacities for mining, road construction and underground equipment (mechanical treatment)

11837

2 Development of capacities for cooperation with “MRCBP” * Included in Cl.1,3,4

3 Welding-and-blank processing 344

4 Thermogalvanic processing 2400

5 Assembly and paint spray processing 4266

6 Designing and research and experimental base ** Recorded in the central enterprise

7 Tool production 1502

8 Repair base 570

9 Central Industrial Laboratory, metrological services 778

10 IT-technologies ** Recorded in the central enterprise

11 Energy department 1742

12 Motor transport and stock department 691

13 Construction of additional production areas * * included in Cl. 1 - 6

TOTAL: 24130

7.3. CJSC “MRCBP”

Pos. № Direction of perspective development

Volume of investments (USD, ths.)

I stage, 2011-2015

1 Development of production capacities for mechanical treatment 9260

2 Development of production capacities for blank processing 20266

3Development of production capacities for assembly-and-welding processing

14192

TOTAL : 43718

8. Production capacities, created at PA “BELAZ" 8.1. Parent enterprise OJSC “BELAZ" in Zhodino

605010

150

215

260

350

500520

200

6530

220

4065

476490500520

0

100

200

300

400

500

600

pc

s

Capacities in 2010 520 500 350 15 260 2 150 10 50 60

Capacities in 2015 520 500 490 65 476 40 220 30 65 200

Dump truck 30t

Dump truck 42-

45t

Dump truck 55-

65t

Dump truck 90t

Dump truck 120-

136t

Dump truck 150-

170t

Dump truck 180-

240t

Dump truck 320-

400t

Special equipme

nt

Spare parts

(million

8.2. Branch of OJSC “BELAZ” in Mogilev (“MOAZ")

75

20 15

40

10 10

150

10 10

55

1530 3030

50

25

50 55 5040

50 5040 30

0

20

40

60

80

100

120

140

160

Scra

per 1

8t

dum

p tr

uck

25T

3-ax

le d

ump

truc

k

Load

er

Whe

el-d

ozer

Gar

bage

truc

k

Mul

tipur

pose

cha

ssis

Truc

k m

ixer

Und

ergr

ound

truc

k 22

t

Und

ergr

ound

truc

k 40

t

Und

ergr

ound

aut

otra

in

Load

-hau

l dum

p un

it

Aut

ocon

cret

e pu

mp

Elec

tric

car

pc

s

Capacities in 2010 (410 units) Capacities in 2015 (535 units)

8.3. CJSC “MVZ" (production of carriages, open-top wagons, containers)

1100

1600

1850

2100

2350

2550

0

500

1000

1500

2000

2500

3000

2010 2011 2012 2013 2014 2015

pc

s

Production capacities, created at CJSC "MVZ"

9. INVESTMENT DEMAND FOR THE YEARS OF 2011-2015

Item Investment object

Investment volume

Parent enterprise

OJSC «BELAZ»

Branch of OJSC

«BELAZ» in Mogilev

Total at OJSC «BELAZ»

CJSC «MVZ»Total at

PA «BELAZ»

1Technological equipment for capacities improving in the main production

158771,3 19841 178612,3 43593 222205,3

2Technological equipment (devices) for improving of auxiliary services

35007,7 3469 38476,7 -* 38476,7

3New construction and reconstruction of assembly and painting lines

30000 -* 30000 - ** 30000

4 Project works 750 -* 750 - * 750

5Construction and assembly works (preparation of work area, base making , assembly)

6075 820 6895 125 7020

6 TOTAL: 230604 24130 254734 43718 298452

* - Included in point 1 ** - planned transfer of MOAZ area

10. Distribution of investments within the Project execution during 2011-2015 among BELAZ Divisions

Item

Division

Investment volume yearwise (thousand USD)

2010 (actual)

2011 (expected)

2012 2013г 2014 2015Total

2011-2015

1Parent enterprise OJSC «BELAZ»

in Zhodino23355 36120 39771 44327 49899 60487 230604

2Branch of OJSC

«BELAZ» in Mogilev (MOAZ)

3388 3067 4189 5130 5737 6007 24130

4Total for OJSC «BELAZ»

26743 39187 43960 49457 55636 66494 254734

5 CJSC «MVZ»* 12318 5480 6290 7075 7962 16910 43718

8Total for PA «BELAZ»

39061 44667 50250 56532 63598 83404 298452

* - In case of project execution in respect of implementation of container production and cryogenic machinery production at CJSC “MVZ” for transportation and storage of condensed gas, it is planned to involve additional investment resources at the cost of foreign investor

11. Structure of financing sources for covering of investment costs of PA “BELAZ" for the years of 2011-20154

I stage (2011-2015) - total 298 452 thousand USD

USD 29 726 ths. - 10,0%

USD 51 372 ths. - 17,2%

USD 217 353 ths. - 72,8%

PA "BELAZ" equity capital - 15 % according to the contractinnovation fund of Ministry of Industry of Republic of Belarusborrow ed capital (credit resources) - 85 % according to the contract

USD 94 369 ths. -31,6%

USD 29 726 ths.- 10,0%

USD 174 356 ths.- 58,4%

PA "BELAZ" amortization fundinnovation fund of Ministry of Industry of Republic of BelarusPA "BELAZ" net profit

The initial stage – according to borrowing costs involvement or credits borrowing costs

Sources for covering the involved borrowing costs under the I stage

12. Main figures of the investment development project of PA “BELAZ” for 2011-2015

Pos.№

Description of the figuresUnit of

measureFigures in follow up of sales

1 Commodity output in 2015 USD, mln 1238,3

2 Commodity growth rate toward 2010 % 189,9

3Output for one worker according to the production plan

USD, ths 97,2

4 Output growth rate toward 2010 % 160,6

5Number according to the production plan (growth rate toward 2010)

people (%)12741

(118,2 %)

5.1.Including quantity of direct production workers (growth rate toward 2010)

people (%)4998

(137,1 %)

6 Volume of investments USD, mln 298,452

7 Commissioning of new production areas m2 30480

8 Commissioning of new equipment pcs 722

8.1 Including machines with NPC pcs 224

9 Decommissioning of outdated equipment pcs 493

9.1 Including machines with NPC pcs 83

10 Technological equipment wear %57,5 % *

74,4 %

11 Net profit in use of enterprises ** USD, mln 290,399

12 Pay-back period years 5,33

* - the nominator indicates the figure after the project execution while the denominator indicates the figures for 2010. ** - for the whole project execution period.